Open Access Research Article
CORPORATE LIABILITY FOR ENVIRONMENTAL HARM: A STUDY
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CORPORATE LIABILITY FOR
ENVIRONMENTAL HARM: A STUDY
AUTHORED BY - POOJA N HATYAL
Abstract
The application of criminal law in
the corporate sector reflects the shift. The administrative and civil aspects
of statutes imposed on corporations have, for the most part, undergone a
critical change in favor of preliminary criminal prosecutions. This is
significant not only from the standpoint of environmental preservation but also
from the standpoint of public safety. At the moment, existing environmental
laws are equipped with legal mechanisms to send offenders to jail or prison as
well as provide for "offences by organizations." If only enforcing
the law had been as easy as administering it, there probably would have been
less problems. Fixing criminal obligations on firms was the primary concern.
Businesses have a significant impact on a nation's economy by raising
employment levels and influencing people's quality of life. Since they
represent a substantial portion of the populace, it is critical to hold them
responsible for their misbehavior.
Nevertheless, large firms frequently
engage in activities that seriously damage the environment. Even if human
history over the past few millennia is characterized by its steady advancement
in various fields, the mysteries of nature have frequently shown themselves to
be highly amenable to human thought and behavior. Its core idea is that it is
essential to preserve the natural equilibrium that exists between human
existence and the environment. This is the fundamental need for all life,
including human life, to flourish. This paper's primary contribution will be to
assist the relevant government authorities in raising Indian citizens'
knowledge of environmental issues.
Keywords: liability, pollution, environment,
penalty, responsibility
Introduction
Due to their extraordinary ability
for dishonesty and their resistance to punishment or disfavor, corporate
entities are more corrupted and immoral than human beings. The legitimate
executive's relentless fight against the urgency of assigning criminal responsibility
to the detailed elements is acknowledged as the foundation for the
understanding of the criminal danger associated with corporate bodies. The
globe has become more interconnected because of technological advancements, and
company operations based only on people's ethical responsibilities have become
more widespread. The Company is a legal entity with distinct rights,
obligations, and self-benefits from its members that is permitted to enter into
contracts and may be viewed as such.
The rapid economic expansion of India
has harmed the environment. The nation contributes significantly to global
water and air pollution, as well as greenhouse gas emissions. Since corporate
operations often have a significant impact on environmental harm, the idea of corporate
responsibility for environmental damage has become a critical concern in this
context. The Indian government has put in place a variety of legal frameworks
to make companies responsible for environmental damage caused by their
operations. This study examines the legal system, courts, and the difficulties
in putting these regulations into practice, in addition to corporate
responsibility for environmental harm in India.
Conceptual
framework
Environmental damage
and corporate liability is a complicated and developing legal field. It is
about corporations' legal accountability for the harm they do to the
environment. This can involve injury to people's health and well-being and harm
to the environment, including the air, water, and soil. Corporate responsibility
for environmental damage should be enforced for several reasons. Businesses are
frequently the ones who profit from actions that harm the environment. For
instance, companies that cause environmental damage can lower their expenses
and raise their profits by shifting the consequences of their activities onto
the general public. Businesses are frequently better positioned than private
citizens to stop and lessen environmental harm. Businesses possess the means
and know-how to create and carry out environmental protection policies. They
can also disperse the expenses of environmental preservation among many
individuals and goods.[1]
Companies that engage
in ecologically destructive activities may be discouraged from doing so by
corporate liability for environmental harm. The possibility of facing legal
repercussions may incentivize corporate actions to avoid and mitigate
environmental damage.
There are several ways
in which a corporation may be held accountable for environmental damage. These
consist of:
Strict liability: This implies that
even in cases where a company is not at fault for environmental harm, it may
still be held accountable. Activities that are thought to be intrinsically
risky, such as the storage and transportation of hazardous materials, are
frequently subject to strict liability.
Negligence: It refers to
the failure to take reasonable precautions to prevent environmental damage from
happening, which makes a firm accountable for any resulting harm to the
environment. For instance, if a company releases pollutants into the atmosphere
without taking the necessary safety measures to stop the contaminants from
harming people, that company may be held responsible.
Intentional misconduct: If a company
purposefully causes environmental damage, it may be held accountable for the
harm done. For instance, it might be discovered that a company deliberately
misrepresented a product's environmental concerns to boost sales.
Issues
involved
Legal Ambiguity and Varying Standards
is one of the issues. It is difficult to define and apply corporate
liability consistently due to ambiguity in the law and differences in
environmental laws and standards between jurisdictions. Establishing a uniform
strategy for corporate environmental accountability is challenging due to
various regulatory frameworks and standards that vary throughout nations.
Another problem is attribution of
responsibility, which presents difficult decisions about how much of an
environmental harm a firm should be held accountable for. Determining causality
is still a challenging legal undertaking, especially when there is a
possibility of indirect injury or complicated supply chains. In these
situations, defining who is responsible for what becomes complicated.
Corporate Ethics and Social
Responsibility. It is essential to comprehend the business practices and
actions that cause environmental harm. It is a constant challenge to evaluate
business behavior, policy, and ethics while striking a balance between
environmental responsibility and financial goals. Many businesses prioritize
maximizing profits before mitigating their negative effects on the environment.
Regulations' effectiveness is
restricted by compliance errors and insufficient enforcement tools. The
efficient execution of environmental regulations is hampered by insufficient
resources, lax enforcement, and regulatory system gaps, which enable some firms
to evade accountability for their conduct.
Determining accountability across
many jurisdictions poses a substantial challenge, as many firms operate
globally. Holding businesses accountable for their environmental impact is
frequently made more difficult by the complexity of cross-border corporate
operations, particularly when national laws and regulations differ.
Governmental organizations and
regulatory agencies might not have the tools, know-how, or resources needed to
properly monitor and enforce environmental compliance. This restriction can
make it more difficult to control business operations and guarantee that
environmental regulations are followed.
Affected communities' ability to
pursue justice for environmental harm perpetrated by companies is hampered by a
lack of public knowledge about environmental issues, rights, and available
legal choices. A lack of lobbying efforts and insufficient public awareness
could make it more difficult to hold corporations accountable.
Judicial
perspective
In India, corporate liability for
environmental harm is based on two laws: the Water (Prevention and Control of
Pollution) Act of 1974 and the Environmental Protection Act of 1986.
These Acts provide penalties for
disobedience and mandate that businesses maintain the environment. In addition
to directions from the State Pollution Control Boards (SPCBs) and the Central
Pollution Control Board (CPCB), the Ministry of Environment, Forests, and
Climate Change (MoEFCC) has also drafted legislation and regulations.
India's main environmental protection
law is the Environment Protection Act of 1986. By lowering dangers to people,
other animals, plants, and property, the law seeks to protect and improve the
environment. The Act gives the federal and state governments the power to
regulate and forbid activities that endanger the environment in addition to the
power to pass laws that protect and improve it. The legislation also specifies
penalties for breaching the law.
The Environmental Protection Act
holds the business accountable for any harm its operations create to the
environment. Everyone is required under Section 5 of the Act to take the
appropriate steps to prevent contamination of the environment. Under Chapter 7,
there are jail time and fines for breaking the Act's rules. State and federal
governments are also permitted by law governments should pursue monetary
reparations for harms brought about by wrongdoers.
The Environmental Protection Act
holds the business accountable for any harm its operations create to the
environment. Everyone is required under Section 5 of the Act to take the
appropriate steps to prevent contamination of the environment. Under Chapter 7,
there are jail time and fines for breaking the Act's rules. State and federal
governments are also permitted by law. Governments should pursue monetary
reparations for harms brought about by wrongdoers.
The Water (Prevention and Control of
Pollution) Act, enacted in 1974, provides a vital legal foundation for the
preservation of the environment in India. By limiting the discharge of
pollutants into water bodies, the Act aims to prevent and mitigate water
pollution. The Act grants the federal and state governments the power to
regulate the discharge of pollutants into water bodies and to establish
standards for the quality of the water. The Act specifies fines and jail time
as penalties for violating its guidelines.
Under the Water (Prevention and
Control of Pollution) Act, corporate companies may be held liable for
environmental harm caused by their operations. According to Section 24, there
are fines and imprisonment as penalties for violating the Act's regulations.
Additionally, the Act grants state governments the power to pursue damages from
violators.
As part of India's legal framework
for corporate accountability for environmental harm, the MoEFCC has created
rules and regulations. The MoEFCC has created rules and regulations for the
management of biomedical waste, e-waste, and hazardous waste. Businesses who
handle and dispose of these materials improperly run the danger of fines under
these rules and regulations.
In addition, guidelines are published
by the CPCBs and SPCBs to minimize pollution and safeguard the environment.
These suggestions provide guidance on
a number of environmental protection-related issues, including minimizing air
and water pollution, managing waste for both industrial and municipal uses, and
more. The standards also outline allowable emissions and effluent levels for
businesses and provide penalties for noncompliance.
In India, corporate liability for
environmental harm is based on two laws: the Water (Prevention and Control of
Pollution) Act of 1974 and the Environmental Protection Act of 1986. These Acts
provide penalties for disobedience and mandate that businesses maintain the
environment. The MoEFCC produced the rules and regulations that make up the
legal framework in addition to the directives issued by the CPCB and SPCBs. In
India, even with a legislative framework, determining business accountability
for environmental damage is challenging. Both increased public knowledge of
environmental issues and enforcement are necessary.[2]
Judicial decisions
In India, the judiciary
has established corporate responsibility for environmental damage over the
years. Numerous historic rulings from the Supreme Court and High Courts have
had a significant influence on Indian environmental law. We go over a few of
the substantial court rulings below:
Among the worst
industrial catastrophes in history is the Bhopal gas tragedy. It happened in
the Union Carbide India Limited (UCIL) pesticide facility in Bhopal, India, on
the evening of December 2-3, 1984. Methyl isocyanate (MIC), a hazardous
chemical, spilt from the factory, poisoning more than 500,000 people with its
fumes. Approximately 3,800 individuals were thought to have died immediately,
but thousands more others died and developed chronic illnesses as a result of
the long-term health effects.
Criminal charges were
brought in this case against UCC and its representatives for their suspected
involvement in the gas leak. The accident was allegedly caused by the company's
carelessness, lax safety regulations, and insufficient plant maintenance.
In 1989, UCC and
the Indian government came to an agreement whereby UCC agreed to pay $470
million in compensation. Many claimed this settlement was much less than the
actual damages and did not sufficiently address the long-term effects on the
environment and public health, making it highly contentious.
Since the settlement
spared the company and its officials from additional criminal prosecution, it
was criticized for being insufficient and contentious. The payment raised
discussions about corporate responsibility, justice, and compensation for
industrial disasters because many victims and campaigners felt it was
inadequate.
When talking about
corporate responsibility, industrial safety regulations, and the difficulties
in obtaining justice and reasonable compensation for victims of industrial
accidents, the Bhopal gas tragedy case is still a key discussion topic.[4]
·
Vellore
Citizens Welfare Forum v. Union of India[5]
The role of tanneries in Vellore, Tamil Nadu, pollution was the topic of
that court case. The Supreme Court decided to penalize individuals who
disregarded the order prohibiting tanning businesses without a water treatment
system. The court also ordered the federal and state governments to put many
environmental protection measures into effect, including developing rules for
handling hazardous trash.
·
Indian Council for Enviro-Legal Action v. Union of India[6]
This case relates to industrial pollution in Bhopal, Madhya Pradesh. The 'polluter pays principle' was
for the first time, applied and defined in this case. The Supreme Court ordered the federal and state governments to take
several environmental protection measures in its ruling, including creating a
commission to regulate pollution in the city. The court also mandated the
shutdown of any industry without sewage treatment plants and fined anyone who
disobeyed its rules.[7]
·
Subhash
Kumar v. State of Bihar[8]
In this instance, the issue was pollution brought on by factories in the
Bihar city of Dhanbad. The Supreme Court ordered the closure of all businesses
without sewage treatment plants and levied penalties on the violators. In
addition, the court-mandated several environmental protection actions from the
federal and state governments, including forming a commission to monitor city
pollution.
Analysis
Corporate liability for environmental harm is a complex and
controversial topic. On the one hand, it is important to hold corporations
accountable for the damage they cause to the environment and to compensate
victims of environmental harm. On the other hand, it is important to avoid
imposing excessive liability on corporations, which could stifle economic
growth and innovation.
There are several justifications for holding corporations accountable
for environmental damage. One viewpoint is that environmental justice must be
promoted. The poorest and most vulnerable communities frequently suffer the
most when corporations degrade the environment. Ensuring that these communities
receive compensation for the harm they have endured can be facilitated by
corporate liability. The capacity of corporate liability to dissuade businesses
from initially harming the environment is another argument in favour of it.
Corporations are more likely to take action to avert environmental harm when
they are aware that they may be held accountable for the harm they cause.
The consequences of environmental harm can be internalised with the aid
of corporate liability. Businesses must account for these expenses in their
decision-making when they are held accountable for the harm they cause to the
environment. More sustainable business practises may result from this. There
are, nevertheless, a number of defences against corporate responsibility for
environmental damage. One criticism is that it may force businesses to incur
unnecessarily high expenditures, which can result in job losses and a downturn
in the economy. Another contention is that establishing a company's liability
for environmental harm can be challenging. Lastly, there's a worry that
corporate liability would force businesses to relocate their activities to
countries with laxer environmental laws.
Notwithstanding these defences of corporate immunity, there is a growing
movement to make businesses more liable for the harm they do to the
environment. Numerous causes, such as judicial developments, public pressure,
and government regulation, are driving this. It is vital to contemplate
strategies for guaranteeing that those affected by environmental degradation
might obtain recompense. Companies that harm the environment may occasionally
run out of money. It might be required in these situations to set up government
funds in order to recompense victims.
Lastly, it's critical to think about how to further global harmonisation
of corporate environmental responsibilities. This would make it more likely
that businesses, no matter where they operate, will be held responsible for
environmental harm. In general, the subject of corporate accountability for
environmental damage is intricate and significant. It's critical to strike a
balance between the need to prevent putting undue expenses on corporations and
the requirement to hold them accountable for the harm they create.
Findings,
conclusion and suggestions.
The legal field of
corporate accountability for environmental harm is expanding due to judicial
decisions, government regulations, and public pressure. Encouraging
environmental justice, discouraging firms from inflicting environmental harm,
and internalising the costs of environmental damage are all made possible by
corporate liability for environmental harm. Holding companies accountable for
environmental damage presents a number of difficulties, including as the corporate
veil, the complexity of multinational supply networks, and the absence of
international harmonisation.
Corporate liability has
the potential to discourage companies from first harming the environment.
Corporations are more likely to take action to avert environmental harm when
they are aware that they may be held accountable for the harm they cause. The
costs of environmental degradation can be internalised with the use of
corporate liability. Businesses must account for these expenses in their
decision-making when they are held accountable for the harm they cause to the
environment. More sustainable business practises may result from this.
Compensation for victims of environmental harm can be provided through
corporate liability. Victims might receive compensation for their losses when
companies are held responsible for the damage they cause to the environment.
Extend the corporate
liability's reach. This could be achieved by making businesses accountable for
a greater variety of environmental damages, such as indirect damages, human
rights violations, and climate change. In matters involving corporate
liability, change the burden of proof. One way to do this would be to make
companies prove they did not cause environmental damage, as opposed to
plaintiffs having to prove the corporations did. Encourage those who have been
harmed by the environment to get justice. This might be achieved by setting up
government funds to pay victims, bringing down the price of litigation, and
giving victims access to legal aid.
Examine the
difficulties in determining and assigning environmental accountability across
intricate supply chains. Examine how companies handle and are held responsible
for the environmental effects of their subcontractors and suppliers.
Investigate how CSR practises are influenced by public perceptions of corporate
environmental responsibility. Examine how businesses use CSR programmes to
reduce their impact on the environment and uphold public confidence. Focus on
the effectiveness of enforcement mechanisms and compliance strategies in
regulating corporate environmental responsibility. Evaluate challenges and
propose improvements for better enforcement of environmental laws. To study how
businesses acknowledge, handle, and reduce environmental concerns. Examine the
best practices for business environmental risk assessment and management while
investigating ways to limit environmental damage and avoid harm.
India, a country
well-known for its spiritual legacy and holy rivers, is currently experiencing
a severe environmental catastrophe due to the increasing pollution of its
hallowed waters. Religion holds that bathing in the Ganges, in the north, and
the Cauvery, in the south, purifies and absolves sins. These once-holy rivers
have become landfills due to garbage from industry, agriculture, and homes.
Global environmental deterioration threatens human survival since it transcends
national boundaries. Recognising that education is the catalyst for
environmental awareness, efforts are being made to teach environmental consciousness
to the general public.
Even though they are
extensive and complex, the environmental rules and regulations now in place are
not enough to handle the severity of the issue. Pollution is partly caused by
the overabundance of laws and regulations, which makes it necessary to have
flexible and adaptive legal frameworks to keep up with new scientific
discoveries and technological developments. Scientific discoveries, which are
prone to revision and debate among scientists, must be reflected in
environmental regulations. Encouraging educated and proactive action is made
possible by raising public awareness of environmental laws and their importance
in avoiding and regulating pollution at the industrial and community levels.
References:
1. M.
Shaji & Ambika Kumari, An analysis of corporate criminal liability with
reference to environmental outlook, vol 20 issue 05, xIlkogretim Online -
Elementary Education Online, (2021).
2. Anirudh
Singh Malik, Corporate Liability for Environmental harm in India, Vol. 6
Issue 4, International Journal of Law Management & Humanities, (2023).
3. The
Bhopal Gas Tragedy victims’ case before Supreme Court’s Constitution Bench, SCC online, (accessed
on Oct. 20, 2023, 8pm),
https://www.scconline.com/blog/post/2023/02/08/union-carbide-case-will-supreme-court-enhance-compensation-for-victims-of-bhopal-gas-tragedy-legal-research-legal-news-updates/
https://www.scconline.com/blog/post/2023/02/08/union-carbide-case-will-supreme-court-enhance-compensation-for-victims-of-bhopal-gas-tragedy-legal-research-legal-news-updates/
4. Satish C. Shastri, The polluter
pays principle and the supreme court of India, Vol. 42, No. 1, Journal of
the Indian Law Institute, 108, 109-110, (2000).
5. Sanjana Jagadeesha, Bhopal Gas
Tragedy: An Analysis Beyond Crime, Vol. 5 Issue 6, International Journal of
Law Management & Humanities, (2022).
6. Ananya Agarwal, Redefining
Corporate Criminal Liability with respect to Environmental Crimes, Vol. 3
Issue 1, International Journal of Legal Science and Innovation, (2022).
Cases:
1.
Union Carbide Corporation vs Union of India, 1990 AIR 273, 1989 SCC (2) 540.
2. Vellore
Citizens Welfare Forum v. Union of India, 1996 5 SCR 241.
3. Indian Council for Enviro-Legal Action v. Union of India, 1996 SCC (3) 212
4. Subhash
Kumar v. State of Bihar, 1991
AIR 420.
[1] M. Shaji & Ambika Kumari, An
analysis of corporate criminal liability with reference to environmental
outlook, vol 20 issue 05, xIlkogretim Online - Elementary Education Online,
(2021).
[2] Anirudh Singh Malik, Corporate
Liability for Environmental harm in India, Vol. 6 Issue 4, International
Journal of Law Management & Humanities, (2023).
[3] 1990 AIR 273, 1989 SCC (2) 540.
[4] The Bhopal Gas Tragedy victims’ case before Supreme Court’s
Constitution Bench, SCC online, (accessed on
Oct. 20, 2023, 8pm),
https://www.scconline.com/blog/post/2023/02/08/union-carbide-case-will-supreme-court-enhance-compensation-for-victims-of-bhopal-gas-tragedy-legal-research-legal-news-updates/
https://www.scconline.com/blog/post/2023/02/08/union-carbide-case-will-supreme-court-enhance-compensation-for-victims-of-bhopal-gas-tragedy-legal-research-legal-news-updates/
[5] 1996 5 SCR 241.
[7]
Satish C. Shastri, The
polluter pays principle and the supreme court of India, Vol. 42, No.
1, Journal of the Indian Law
Institute, 108, 109-110, (2000).
Article Information
CORPORATE LIABILITY FOR ENVIRONMENTAL HARM: A STUDY
Authors: POOJA N HATYAL
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/02/22
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
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